SBA loan for small hotel

[David Rutledge]

Hi everyone,

I am as told to post this question here but I apologize if it’s out of place. 

My wife and I have built up a portfolio of 14 strs over the past few years. We have some capital and are looking to possibly purchase a small hotel.

We have only ever bought residential sfr with conventional financing so commercial lending is totally new to us.

We are looking to put as little down as possible to stretch our capital as much as possible. Ideally 10% down. I’m thinking that an SBA loan would be our best bet but I am not sure.

Can anyone shed some light on what kind of down payment, terms and qualification requirements we would typically be looking at for an SBA or low down commercial loan?

Also as I understand it qualification for these loans are based on the property as opposed to the borrower. So is this just as simple as showing how much the property makes or do they also look at personal debt to income, credit score, reserves etc as well.

Any insight into the kind of options we may have for something like this and how qualification for a small hotel differs from residential conventional loans would be extremely helpful.

Thanks in advance.

[Luke Carl]

I think you’ll find any bank will want 25% on it. Unless you have a massive deposit relationship with them like 1m++++ then they may do 20%

That said they will finance the rehab if you’re a strong borrower and it pencils.